Skip to content
Sign In Subscribe
Economy — News — Discounts — Vehicle — Electric car — China — BYD — Mercedes-Benz — funding stop — Audi — VW — Federal Constitutional Court — Netherlands — Germany — Norway — Volkswagen — Price war — Car — Denmark — Environmental bonus — BMW

Car manufacturers' price war: which shares are now lucrative

The environmental bonus for electric cars has been canceled, and now manufacturers such as VW and Tesla want to compensate for the loss of subsidies by offering discounts. A price war is brewing that is also likely to move share prices.

,   and  Viktoria Klein
4 min read
Tesla is already number two for electric cars in Germany - it is not yet clear that the Cybertruck,....aussiedlerbote.de
Tesla is already number two for electric cars in Germany - it is not yet clear that the Cybertruck, which takes some getting used to, will also be a bestseller.aussiedlerbote.de

Electric car subsidy freeze - Car manufacturers' price war: which shares are now lucrative

The environmental bonus for electric vehicles expired on December 18 following the Federal Constitutional Court's ruling on the federal government's debt brake. Dealers and manufacturers are now concerned that demand for e-cars could collapse. Something similar has already happened in Denmark, Norway and the Netherlands after subsidies were withdrawn. Falling demand would also weigh on suppliers' share prices. The shares of German car manufacturers Mercedes, BMW, VW and Audi were already slightly down after the abrupt end of the environmental bonus.

Lucrative car manufacturer shares?

Now more and more car manufacturers are taking countermeasures and have announced that they will replace the bonus with discounts in order to maintain demand. For cars that are delivered and registered this year, Volkswagen, for example, is waiving 6750 euros for customers; for vehicles with a delivery date of 2024, VW is paying an additional 4500 euros. Tesla, BYD, Mercedes, BMW and Audi are also replacing parts of the environmental bonus under slightly different conditions.

The quick and generous price reduction could lead to a fierce price war for e-cars, as competition is growing in this future-oriented business segment and the aim is to secure market share. A look at the world's largest car market in China shows how such a price war could end. There has recently been a regular undercutting competition there, in which manufacturers with high returns on sales are clearly likely to have the upper hand.

One of these is the Chinese car manufacturer BYD, which replaced VW as the top-selling car manufacturer in China in April of this year. According to Marketscreener, the rising brand's estimated return on sales for 2023 is still an adequate six percent. With an estimated price/earnings ratio (P/E) of currently 17, the share is not too highly valued for a fast-growing company. The majority of analysts continue to rate BYD as a buy.

With a return on sales of 9.5 percent, the US electric pioneer Tesla is still well above BYD's value, so it can probably also enter another discount battle. However, with an estimated P/E ratio (2023) of 93.9, the stock is already very highly valued, even though the company has grown at an enormous pace in recent years. In any case, an investment would be a speculation on a continued Tesla boom.

Tesla has long been one of the most successful e-car manufacturers in Germany. 12.7 percent of new registrations between January and November 2023 were Tesla models. According to analyses, price reductions in Germany could therefore cost Tesla up to 300 million euros. This is no small matter, but it won't spoil the balance sheet either. After all, Tesla's profit in 2022 was already the equivalent of around 11.5 billion euros.

Only VW was more popular with car buyers in Germany this year. With 13.7 percent of newly registered e-cars, the German automotive group is still ahead of Tesla. The company seems less well equipped for an impending price war on the German car market: VW is carrying a high debt burden, the mass market business is already considered to have low margins and the expensive transformation into an e-car company is far from complete.

Accordingly, the share is currently valued low: VW has an estimated P/E ratio of 3.78 for the year 2023. Analysts see the average price target at 151 euros - the share price was last at 114 euros, so there is room for upward movement. Important: In contrast to Tesla and BYD, VW continues to build many vehicles with combustion engines, just like the other major German car manufacturers Mercedes, BMW and Audi. Should demand for e-cars in Germany fall temporarily, this segment could benefit once again - possibly for the last time.

This article was first published by Capital, which, like stern, is part of RTL Germany

Read also:

  1. Despite the expiration of the environmental bonus for electric vehicles, car manufacturers like Mercedes, BMW, VW, and Audi are still experiencing slight downturns in their share prices due to the uncertainty surrounding demand.
  2. In response to the subsidy freeze, many car manufacturers are introducing discounts on electric vehicles to maintain demand, with Volkswagen offering a reduction of 6750 euros for vehicles delivered this year and an additional 4500 euros for those delivered in 2024.
  3. The price war for electric cars is likely to intensify further due to growing competition in the segment, and analysts warn that manufacturers with higher returns on sales are likely to emerge as the winners.
  4. The Chinese electric vehicle manufacturer BYD replaced Volkswagen as the top-selling car manufacturer in China in April this year and has an estimated return on sales of 6% for 2023, making it an attractive investment option for analysts.
  5. Tesla, which is already the most popular electric vehicle manufacturer in Germany, could be affected by the price war, with analysts estimating that the company could lose up to 300 million euros due to price reductions in Germany.
  6. Despite this, Tesla's profit in 2022 was already equivalent to around 11.5 billion euros, so the impact on the balance sheet is not expected to be significant.
  7. Despite Tesla's popularity in Germany, VW remains the most popular electric vehicle manufacturer in the country with 13.7% of newly registered e-cars, but the company may struggle in the face of a potential price war due to its high debt burden and low margins.
  8. The Norwegian electric vehicle manufacturer Audi, along with other major German car manufacturers like Mercedes and BMW, will also be impacted by the price war and the subsidy freeze, and could potentially benefit from a temporary increase in demand for vehicles with combustion engines.
  9. The Federal Constitutional Court's ruling to end the environmental bonus for electric vehicles has also had an impact in other European countries like Denmark and the Netherlands, where demand for electric vehicles has dropped significantly following the withdrawal of subsidies.

Source: www.stern.de

Comments

Related

Germany necessitates a sensible financial policy once more.
Economy

Germany necessitates a sensible financial policy once more.

Germany necessitates a sensible financial policy once more. Economist Philippa Sigl-Glöckner is vying for the SPD in the Bundestag elections. In her book "Good Money", she advocates for refining the debt limit. In an interview, she explains why it's crucial not to rely on arbitrary figures.

,   and  Mark Rodriguez
Members Public

Latest

Grave accusations levied against JVA staff members in Bavaria
Panorama

Grave accusations levied against JVA staff members in Bavaria

Grave accusations levied against JVA staff members in Bavaria The Augsburg District Attorney's Office is currently investigating several staff members of the Augsburg-Gablingen prison (JVA) on allegations of severe prisoner mistreatment. The focus of the investigation is on claims of bodily harm in the workplace. It's

,   and  Ann Bradley
Members Public